And wow.
"This isn't your father's oil and gas rig count." -- Rigzone.
How long have we been saying that on the blog. Two years? Three years? Four years? I don't know. Time seems to move at a different speed in the Bakken.
From the linked article, the lede:
Every Friday, the Baker Hughes oil and natural gas rig count gets released. This is vital field information that energy analysts eagerly await. In essence, the count is supposed to convey the current thinking of the U.S. oil and gas industry. As it is supposed to go, higher oil prices mean higher rig counts which mean higher production. And in the opposite direction, lower prices mean less rigs and falling production. While it is true that more rigs usually enter the fields when prices go up, it can take months of higher prices before drillers are confident enough to bring additional rigs into service. And there is also a lag time with dropping prices, not immediately dragging the rig count lower. Many times lower prices just mean removing the less efficient rigs from the field.The end:
Most can agree that we cannot really blame analysts for being so wrong about the shale revolution, a deficiency likely to continue on into the coming decade.
Going back to 2007, for instance, shale was not even being mentioned as a potential source of major new supply. While probably growing slower in 2020, the industry has transformed global energy markets in ways never thought possible – not even by the oil and gas companies themselves. This helps explain why the IEA forecasts that the U.S. will account for 85% of new global crude output and 35% of new natural gas through 2030. For finances, WTI prices sticking above $65 or $70 would be just the boost the shale industry needs. Ultimately, it will be a burgeoning U.S. export business that will mandate new output. The EIA has domestic gas demand rising 1-2% per year for decades to come, while the country’s oil use will remain flat or even decline slightly.Go to the linked article for everything in between.
But let's repeat that one line:
Most can agree that we cannot really blame analysts for being so wrong about the shale revolution, a deficiency likely to continue on into the coming decade."... being so wrong ... a deficiency likely to continue on into the coming decade."
Hmmmm...
... and this is pretty cool ... this is the first post tagged with "Commentary_2020."
Happy New Year!
i had an awkward comment on that article, because i was trying to cut down what i had to say to their 200 character limit (& im no good at twitter either)
ReplyDeleteon the comparison of rig count vs production, 2013 and 2019; many of the wells drilled during the years when the rig count was high were not completed until later years, completions remained high..
you know what i meant, perhaps you could word it better...until the last couple months, 2019's completions were near record levels..
That's a very, very interesting observation. On top of that, the completion strategies evolved over the years. There is no question that the wells have gotten a lot better over time. Interesting, interesting, interesting.
DeleteWow, so many story lines.
In the early days of the boom, it was important to get wells drilled to save leases by production. Once the leases were held by production, operators could cut back on rigs and "manage" their assets more efficiently.
So incredibly interesting on so many levels.
here's a seven word synopsis:
Deleterig counts don't count, but completions do.
That's exactly right. Thank you.
Delete